First Conference on Rail Industry Structure, Competition and Investment

New Rail Passenger Structures in the U.S.

Louis S. ThompsonThompson, Galenson and Associates, LLC

Lthompson@alum.mit.edu

Rail Passenger History in the U.S.

Downhill slide after WWIIFreight railways were heavily burdenedOptions in 1969:

Do nothingPay the freightsCreate separate company

Federally owned, “as if for profit” company (Amtrak)Has not succeeded, but hard to change

Rail Passenger-Miles in the U.S.

010,00020,00030,00040,00050,00060,00070,00080,00090,000

100,000

19251930

19351940

19451950

19551960

19651970

19751980

19851990

19952000

Commuter rail Freight EraAmtrakIntercity total

Financial Performance of U.S. Railroads:Net Railway Operating Income (NROI) and Solely Related Passenger Losses (SRL) (constant 2002 $ millions)

-6000-4000-2000

02000400060008000

10000120001400016000

1940 1945 1950 1955 1960 1965 1970

Pass. "NROI"Pass. SRLClass I total NROI

Financial Performance of U.S. Railroads:Net Railway Operating Income and Solely Related Passenger Losses(constant 2002 $ millions)

Figure 3

-6000-4000-2000

02000400060008000

10000120001400016000

1940 1950 1960 1970 1980 1990 2000

Pass. "NROI"AmtrakClass I total NROIPoly. (Class I total NROI)

DeregulationAmtrak

Amtrak funding by yearin constant 2002 dollars

0

500

1000

1500

2000

2500

3000

1971 1976 1981 1986 1991 1996 2001

OrdinaryNECIPTRAOtherTotal

Total through FY2003: $38,273 million

$ millions

Note: in addition, Amtrak’s debt increased by over$3 billion between FY96 and FY2002.

Amtrak’s Role

Long haul trains not major carrierShort haul trains have some share of the marketNEC is significant (I/S and Operator)Relatively small by international stdsInteresting interaction with State rail passenger operators (FTAA/FRA)

Amtrak System Map

NEC

Empire Builder

Coast Starlight

Calif Zephyr

Southwest Chief City ofNew Orleans

Sunset Limited

Texas Eagle Crescent

Cardinal

CapitolThree Rivers

Lakeshore

“Silver” Trains (3)

Pennsylvanian

Autotrain

Amtrak’s Long Haul Network

Amtrak’s Short Haul Routes

Proposals on the Table

Amtrak Reform Council (ARC)The Administration BillCBO studyAmerican Rail Equity Act (AREA)American Railroad Revitalization, Investment and Enhancement Act (ARRIVE)

Change Issues

Better interface: Congress/DOT/AmtrakStable fundingTransition short haul to State/LocalAmtrak/DOT grant agreementAmtrak as contract commuter operatorBetter public informationChange in private roleImpact on laborSins of the past

Passenger-Km Trends1980=100

40

90

140

190

240

290

1970 1975 1980 1985 1990 1995 2000

Commuter RailAmtrakAirHighway

Figure 9

Labor Productivity Trends (pm/employee or ton-mile/employee) 1980=100

050

100150200250300350400450500

1970 1975 1980 1985 1990 1995 2000

Air Bus, Class IFreight RailroadsTrucking Amtrak

Source: National Transportation Statistics 2002, Table 3-24 and AAR, Statistics of Class I railroads

Passenger-Miles/Employee (000)(2000)

277

973

222

0

200

400

600

800

1000

1200Amtrak only

Amtrak (adj forcommuters)Airlines

Amtrak adjustment for commuters uses average 22 mi/commuter trip.Probably overstates productivity slightly.

The “Emerging Corridors”